Dodge Data & Analytics reported total construction starts lost 7% in June, slipping to a seasonally adjusted annual rate of $863.6 billion. Single-family housing starts are feeling the detrimental effects of rising materials prices. Large projects that broke ground in May were absent in June for nonresidential building and nonbuilding starts, resulting in declines.

“Unabated materials price inflation has driven a significant deceleration in single-family construction,” stated Richard Branch, chief economist for Dodge Data & Analytics. “Lumber futures have eased in recent weeks, but builders are unlikely to see much relief over the short-term, meaning building costs will continue to negatively influence the housing industry. On the other hand, the nascent recovery in nonresidential buildings has continued on as projects pile up in the planning stages. These mixed signals coming from both residential and nonresidential construction starts suggest that recovery from the pandemic will remain uneven in coming months as rising materials prices and labor shortages weigh on the industry.”

Nonresidential building starts dropped 7% in June to a seasonally adjusted annual rate of $288.0 billion. Large healthcare and manufacturing projects provided a significant boost to May, but the absence of similar projects in June led to normalized starts activity. Without the negative influence of these sectors, nonresidential starts would have increased 10% in June. Commercial starts rose 12% with all categories posting gains, while institutional starts fell by 9% and manufacturing starts lost 62% over the month. Through the first six months of 2021, nonresidential building starts were slightly ahead of the first six months of 2020. Commercial starts were up 7% and manufacturing starts were 36% higher, while institutional starts were 5% lower through the first six months.

The largest nonresidential building projects to break ground in June were the $1.0 billion research and development district office project in San Diego, the $470 million second phase of the Oyster Point Offices in San Francisco and the $410 million Amazon distribution center in Rochester, N.Y.

Residential building starts fell 5% in June to a seasonally adjusted annual rate of $403.8 billion. Single-family starts lost 8%, while multifamily starts were 2% higher. From January through June, total residential starts were 32% higher than the same period a year earlier. Single-family starts were up 37%, while multifamily starts were 19% higher.

The largest multifamily structures to break ground in June were the $400 million Courthouse Commons project in San Diego, the $267 million 1900 Crystal Ave residences in Arlington, Va., and the $250 million Five Park Condominiums and Apartments in Miami Beach, Fla.

June’s starts rose in the Northeast but fell in all other regions.